Last April, the Province of Ontario passed Bill 127, a legislation that allows municipalities to collect a municipal transient accommodation sales tax (MAT). The tax, which will be set at the rate of 4%, will apply to hotels, motels, short-term rentals such as AirBnB, and other bed and breakfasts. The hotel tax, effective April 2018, and the short-term rental tax, effective June 2018, have been set in place to help promote and maintain tourism activities in the city and GTA.
The City of Mississauga has been adamant about the implementation of this tax for years, and on February 7th, City Council approved the 4% accommodation tax, which is expected to bring in $10 million per year. Half of that revenue, however, will be donated to Tourism Toronto. Currently, Tourism Toronto is the official destination marketing organization for the region’s tourism industry, which includes the Mississauga region. Tourism Toronto is partially funded through a voluntary Destination Marketing Fee (DMF) program by the Greater Toronto Hotel Association, which allows hotels to charge an extra 3% tax to guests. The DMF program brings in around $20-$30 million per year, most of which is generated in the City of Toronto. Mississauga has only a handful of hotels charging a DMF, therefore only claiming a small portion of the revenue collected. According to the legislation put in place by the Province of Ontario, municipalities that had a DMF program in place would have to remit the revenue collected through the program to the regional tourism agency, in this case, Tourism Toronto. However, if a DMF program was not in place, the municipality would have to donate 50% of its hotel tax revenues to the tourism agency. Since Mississauga only had a small portion of hotels charging this tax, the amount donated to Tourism Toronto would have been around $500,000. However, two days before the hotel tax was approved, the Greater Toronto Hotel Association terminated the DMF program, leaving the City of Mississauga to now pay half of their tax revenues, which equates to nearly $5 million dollars, to Tourism Toronto.
During the Mississauga City Council meeting that took place a few weeks ago, The Mississauga Board of Trade (MBOT) actively pushed for its own dedicated Tourism Bureau in Mississauga, stating it would provide the city with its own stream of revenue without having to rely on Toronto. “Let’s remember that this tax is a levy on guest stays and charged and collected by Mississauga hotels, motels, and short-term accommodations.” CEO of MBOT, David Wojcik said. “According to Mississauga City staff, this represents close to 60 properties plus any short-term accommodations.” Wojcik has been pushing for the city’s own tourism bureau for quite some time, stating that they would like to promote Mississauga’s art and culture attractions, such as: Hershey Centre, Square One Shopping Centre, the Living Arts Centre, the waterfront, etc. MBOT is advocating for the funds received from this tax being donated right back to the city. “This is a great opportunity for Mississauga to stand on its own in marketing our city as a tourist destination. As the third largest city in Ontario, Mississauga deserves to be recognized as a vibrant stand-alone tourism destination where visitors can soak in the Mississauga culture, sights and experience we all know and love.” Wojcik stated.